tv Squawk on the Street CNBC November 18, 2013 9:00am-12:01pm EST
superhero sequel, "thor the dark world" held number one at the box office but in second place, "the best man holiday" brought in $30.6 million. the movie is about a group of friends gathering for christmas. it's a sequel to a 1999 "the best man." right now it's time for "squawk on the street." ♪ good monday morning. i'm carl quintanilla along with david faber. in san francisco is jim cramer at the user conference dreamforce 2013. still celebrating the eagles'
win yesterday, what is going to happen? >> this is a love fest between companies that are using the cloud. they are cutting out the traditional way that companies get their software. >> earnings tonight, they have totally redone the center, david and not only mc hammer, tony bennett, but green day. jim, i assume you're going to go to all of those? >> i have to go to them. i am credentialed, carl. how about this tunnel behind me. this is the largest tunnel in north america. it's assembled at the uk, brought here by ship. you know how he likes to do things on a creative scale. >> oh, yeah. in the meantime, jim, futures are pretty steady, as you know. watch for what they are calling a hat trick. s&p, 1800.
ten years under 2.7. up 3% in reaction to some of the reforms coming out of china. our roadmap begins with major market downsizing to 16,000. s&p shy and the nasdaq very close to 4k. boeing hiring the premarket on $100 billion in orders for a revamped 777. and microsoft gets a downgrade from bank of america. meanwhile, outgoing ceo calls himself an emblem of an old era. >> all right. six consecutive weeks of gains. s&p hasn't had six weeks up in a row since february. people were talking about the january effect being brought in a little bit closer to november. what's the take on your term?
>> i like the rotation. let's see the jpmorgan news. tech has been choppy. i guess what i'm saying is that the s&p has been working because of a rotation from group to group to group. you mentioned china. i think china to see their market go up after the reforms that they announced, that could be just a total tailwind for the mineral stocks which have been horrendous for the last few weeks. >> you know, jim, we're starting to get bubble talk wherever you go. it's the journal, barrons. you're out there in what people would call bubble land right now, given what we've seen from ipos. but again, we use that term -- you and i have been through that couple of real bubbles, whether it's housing or the dot-com. where are you given all of the noise out there on this? >> i'm reviewing all of these companies that i'm going to be
speaking to, dave, and i've got to tell you, it's a theme. there's no earnings per share. there's no p.e. multiple. every time i look i say, wow, this is only selling at 18. no, it's 18 times sales. you and i had a parallel track in 1999 and in 2000 is switched. s&p bottoms. what i fear is that right now we are in that period where there's a whole group of stocks that have lost the moorings of what we regard as being traditional valuation and that's never a good sign. >> yeah. meantime, what may bring us back to reality is these retail earnings. jcpenney says it's going to be the worst holiday season since 2008. consumer sentiment had a bad day friday. is that going to keep us grounded? >> morgan stanley has a grinch thing that they are throwing at
us. we have all systems go from the high end. walmart was shattering. i defer to david. i still believe that walmart has execution issues, given the fact that costco is good. i think home depot is going to surprise the hardware kind of stores, the big boxes, very positive. so i'm not willing to say that christmas is going to be terrible. the holiday season to me is a little shotgun-oriented. it's a week short. >> we're going to get a lot more fed speak this week. bernanke actually tomorrow night some saying that he's beginning to fade into the background, jim, trying to say as little as possible, paving the way for his successor. >> a gentleman to the end. i bet he does disappear to the sunset. i don't think he does what tim geithner did. disappear to private equity.
>> yeah. where does bernanke go? back to academia. >> back to princeton. i don't even know how they did this weekendweekend. who cares. >> any day now they are going to be ready. jim, usa today has a nice piece about dreamforce 2014, talking about the competition that they have at oracle and some of the platforms themselves. the stock is up 14 folds since their ipo in 2004. gaining momentum or not? >> yes, gaining momentum. it's a bit of a revolution. they have really lost their way which is so amazing because when you read the balmer comments.
how can you feel bad for a guy who is a billionaire? at the same time, balmer wistful and benioff. >> you're referring to the interview that he gave to the journal and then the down grade to the b of a, stocks liable for about 10%. >> the fact that malloli stock did not go up is how interesting because balmer's comments basically said he's too old. if you want old, malloli will give you old. >> but apparently there are new ideas, jim, than perhaps ballmer. it's not really age.
it's how many years you have on you compared to the company. >> the oldest coast in the nfl has been reinventing that p can. i think we're too age centric and so is ballmer. maybe you have someone come in who is senior and say, look, i've seen this happen before. we need to bring out value. and malloli has brought out value. >> interesting story, though, from "the journal" in the way that the role that thompson played and getting to that decision. we speculated a lot on whether ballmer was pressured at all by value act. it pushes back his decision after, of course, the lead director is saying, come on, let's get some -- >> yeah. there was a little bit of here's
your hat. 40 resignation letters? i mean, hey, that's a lot of resignation letters. trying to find the right tone. there's a little too much soul search. the search does bother me. >> why? >> yeah, because he's got his whole life ahead of him. he's a young guy. we sat next to each other in what was a soul-searching treatus as to how young people don't take vacation. when did we take a vacation? probably in 1979. he really wants to enjoy life. for some of us, that is kind of a dream. it's not a bad idea. >> here's a look at what he did tell the journal. "maybe i'm an emblem of an old
era and i have to move on. as much as i love everything about what i'm doing, the best way for microsoft to enter a new era is a new leader who will at the end of the day we need to break a pattern. face it. i'm a pattern." he increased his net worth by billions. >> there's too much irony. i think he needs to lighten up. lighten up, man, you did okay. look how ibm has done, oracle. look at cisco. if ballmer is having a crisis, chambers has to be thinking, wow, what have i done? kind of like what have i done? that's what chambers must feel like. time to blow it up. >> but this has a personal element for you. let's admit that, right, jim? given your relationship with ballmer, same age, education.
>> i love ballmer. >> can i just tell you that we made so much money yet we were nonprofit. i told him, enough, you can't make any more money. every time he played poker he brought a shoebox full of change. we called him shoebox steve. let's move on to jpmorgan. that was over the sale of mortgage-backed securities covered by jpmorgan and bear stearns in 2005 and 2008. jpmorgan bought bear stearns. it was march of 2008. it predated the heart of the crisis being that it was in march but bear stearns was 2 bucks and ended up being $10. the larger question here is are
they moving through all of the various fines, penalties, fees, settlements that they need to, can investors see through to the other side? they have put aside 23 billion for so-called litigation expense. jim, i start to wonder whether the continued -- i wouldn't call it an avalanche but the continued pressure from regulate are to regulators and all of the pressure points that they seem to be applying, one has to wonder whether we'll truly abate and get back to what we call real earnings power for these financial institutions. >> look, if we had normalized earnings and this is not a normal time, then jpmorgan would probably be 6, 7 points higher. all of these settlements are at the behest of the u.s. attorney. he's not going to sit down and negotiate. he's going to say, look, here's my deal. take it or not. and for jamie dimon to take it
may be too much. are they back on twitter, david? >> no, i don't believe they have re-engaged yet. >> on ask jpm? back to the drawing board i think they said. >> yeah. you're not going to see the light of day on that for a while. >> no. we may not see -- we may not see a lot of like retweeting by jamie. do you think he retweets, like why did i do this? >> jim, stick around. we're going to come back to you after a break. when we return, boeing getting a blockbuster numbers. that's coming up next. also ahead, combining your credit cards into one device. we'll talk to the ceo of a device that does just that. a lot more from squawk on the street in just a moment.
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build the new version of the 777 jet. jim, this is a big deal. not only for boeing but airbus is having so many problems that airbus is suggesting that they may have to cut production of that rival plane. >> yep. what's incredible here is that the fulcrum for all aerospace -- if you look at the orders coming from dubai, you finally realize how mcnurney has said that he has a ten-year plan. plus, if he's able to get the labor costs under control, you could have a multi-year move. it's been the best performing stock in the dow. it is so not done, carl. these orders verify the fact that this company has a road map that easily could last for as long as, frankly, 10, 15 years of upside. >> yeah. >> the 25-year plan if he's got
another plan on top of that. wow, the 777 is a money plane. they are going to make a fortune on each plane that they make. >> jim, you've had good winners in your charitable trust. at 140, as the best performing dow component of the year, when do you take some? >> here's the problem. we know whenever there has been a new iteration of a plane, it's almost biblical. we're in year two. honeywell is along for the ride. they make the cockpit. boeing was the worse -- you know, mcnerney is just a great american executive. think about a few months ago, even to the ethiopian fire and i said, you must have been so worried. and he said, not the least bit. this is a solvable problem. what it makes you feel like is, we're going to get this done.
boeing's america's greatest manufacturer. >> that's interesting. of course, so interesting as well, the look at where the demand comes from. we've said many times but asian committees. that is the key market. that's where the growth is, of course. we can talk about consolidation. doing a good job and taking a look at it. something that we did live at the time, looking at the two statements from the doj when they challenged that merger and then allowed it. nonetheless, the demand is from there. >> it brings up one other story regarding boeing. at least 50 people were killed when a plane crashed in russia last night. the boeing 737 from moscow exploded after a failed attempt to land. boeing is going to provide technical help as the accident is being investigated.
separately, jim, you were at this eagles' yesterday afternoon. you're in san francisco today. how did you get there so quickly? what have the last 12 hours been like for you? >> well, first, you know i was fighting tears. i had been to 15 straight losses after two wins. i got out here, and chose not to sleep because that's a complete waste of time when you're trying to figure out how to interview all of these ceos. the elation of sports has transferred immediately to the elation of the cloud. there are a lot of companies doing -- this is an american -- this is a totally american phenomena. i know a lot of people get down our country and worried about health care and it's another country out here. it's a country of hope. i think you guys would be elated if you were out here. >> sounds like a road trip to me. >> i know it. >> people are saying, jim, it's
a good thing you're at dreamforce because you've got to be on cloud nine given what happened to the eagles yesterday. >> i find it tiresome that the giants put four wins together and suddenly the giants are ahead of the eagles. it's kind of arithmetic when you have six wins, that's more wins than the giants have. >> you might want to give it a little time. >> yep. give it a little time. when we come back, a special coast to coast cramer's mad dash. and we just had jeff of i.c.e. make his way to the floor here. the deal is now closed. we'll get that when "squawk on the street" returns. i'm a caref. when you do what i do, you think about risk. i don't like the ups and downs of the market, but i can't just sit on my cash. i want to be prepared for the long haul. ishares minimum volatility etfs. investments designed for a smoother ride. find out why 9 out of 10 large professional investors choose ishares for their etfs.
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♪ all right. we've got six minutes before the opening bell on a monday. time for mad dash. trans national across the country. is that right, jim? i was an english major but god forbid i should know the right terminology. >> i think we've become a national show with this right here. >> all right. >> well, you're 3,000 miles away but you're always close to my heart, as you know. let's start off with the supervalu. >> you know what, this is the first time, david, i think there's a recognition that the whole group is going to be under pressure because it's well capitalized. supervalu held the sell. this has been one of the worst performers in the s&p.
safeway has been up. kroger is doing well. and then you talk about whole foods and competition and we know that sprout's market got a lot of value. fairway has been going down. i've got to tell you, this group is just too competitive and i want to know whether or not we're at the lowering of the price multiple of the group because everyone has figured out you want wholesome foods and then let's layer on target and costco because those guys are bent on taking supermarket business and they are very successful at it. >> the largest supermarket in the country, which is walmart, correct? >> look, i always defer to a man that has done not one but two documentaries and walmart is just beginning to get the ride kind of food in. the right kind of food meaning that they were very, let's say, not embracing of the natural organic up front.
it's so strong, i had jack on friday, "mad money," he's the cfo of chipotle, it's to get rid of gmo. monsanto is on the firing line, sugar is on the firing line. >> jim, stand by. of course, we've got the opening bell about four minutes away. a lot more "squawk on the street" on a monday coming back. in a world that's changing faster than ever,
or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. you're watching cnbc "squawk on the street." it does like we are going to get dow 16,000 and s&p 1800 right at the opening. we've had dow 14k, 15k, 16k. three millenial marks. that's a big deal. >> the whole conversation has been, well, when are we going to
taper? because of that we've missed the earning explosions that have driven the dow. the taper talk made you no money and kept you out. >> 16 trillion in market value after passing 15 trillion in july. look at the top of the screen. down here you have the intercontinental exchange. they are celebrating nyse over at the nasdaq, communication platforms. that comes on the back of a strong night in asia overnight. dow 16k. a lot of discussion about how fearful investors are of large, round numbers. what do you think? >> well, we usually have a selloff, like a knee-jerk
selloff. frankly this whole rally is done without the individual investor until recently and a lot of the chatter is until we get revenue growth we're not going to have stocks move higher. guess what, if we get revenue growth, stocks go up substantially. this has been done on earnings. >> yeah. although, to be fair, the s&p is going to close 15 times the estimates. we were trading around 12 time ts. so that's multiple expansion. and that's fine. in part because the earnings will be better than anticipated as well but, you know, jim, it's not quite as cheap as it was when we started the year and many say it can't continue. >> the bull side is to say that it should have never been at 12 but the bear side says interest rates went up dramatically, very quickly. we didn't get the crunch. i come back to the fact that the
international companies are doing really, really well and they are the real power behind this. when you get stocks like 18, 19 times earnings, that is a recognition that the rest of the world is doing better. but david, is the rest of the world isn't doing better, you're going to get some of that back when 2014 starts. >> looks like the nasdaq is going to be left out of the party for a while. still a ways to go. we have not had 4k on the nas until september of 2000. that's going to be hard to crack. >> yeah. remember, that was the dark side of the moon because we had gone up to 5,000 during the week -- second week of march. what's interesting is look at who rank the bell.
it does have great sales. publics coming company now think that earning money is a big mistake, that what matters is being a mover. do you remember when we used to be proud of companies that didn't make money because it made sense for them not to do so? >> that's what they told us. it was all about investing and continuing to expand a model because it was so important. >> eampb went to the am ma sflon. >> right. >> because bezos set the tone. don't even think for a moment what matters is earnings. as a matter of fact, i think there's a consensus that if you started showing earnings it means you're not moving fast enough and i think that's a mistake. that has to stop at a certain
point. they say, listen, if you're going to dominate, this is the chance. marc benioff doesn't think that you have a choice. but so what? >> it's interesting, jim, the company's ceo was right here when they went public. they are growing quickly. so certainly important to watch. i mean, the $13 billion market value at this point. that was the old peoplesoft crowd that came over and created workday. >> revenge is a best tasting cold here, david. they are carving up oracle's business. oracle is lurking in the background as the guy whose business they want but it's also microsoft and ibm. remember, the model of cloud really kills these old line
company's margins. a lot of them claim they are cloud. but meanwhile, benioff is saying, get off my cloud, partner. >> jcpenney is the third or fourth top gainer on the s&p. we mentioned we're going to get earnings from the company. but i'm just looking for the month, jim. just for the first 2 1/2 weeks, basically, november, up 23% as we begin to wonder who is taking a renewed interest in this long-troubled name. >> i think apparel. we forget that the court has been cold. we finally have a combination of cold weather and cold weather apparel in stores. that means no markdowns. it means full price. it means beat the numbers. >> and on jcpenney, you cleared out a lot of those hedge fund guys, all of whom were sellers, let's not forget, and that contributed to the last leg down, whether it was glennview or hamon or perry.
not sure where z soros is right now. there would not be a huge equity offering. but it's climbed back to double digits, carl, at jcpenney. >> up 10% last week along. >> zone me may be the one to watch. that's double what the psc did. although there are lingering comments about bug glitches in the software. but sony, talk about another big hedge fund play, that's going to be an interesting one to watch. >> and sony got an upgrade last week. if you believe in this cycle, gamestop and best buy have been two companies that people just wrote off. they were moreyed about beating amazon. game stop could have a very big
2014 once the hardware comes out, you've got the software behind it and it's a cheap stock despite that it's been a rocket ship higher. >> we should mention shares of boeing are up 3.5%. >> wow. >> you've talked a lot about it, jim, before the market opened. but worth noting there adding to an 86.7% gain thus far this year. that's staggering. >> well, look, think about what the dreamliner focus was. all we could think about for a period of months was that this new plane ain't working and therefore boeing is going to be sent into the wolfs and airbus is going to take them on. turns out, you can't get a dreamliner until 2020. and i bet you after they get back from dubai, it's going to turn out that you need a ten-year wait for the dreamliner. >> the backlog is huge at that
company. interesting point you made about hard to ring the register when their order cycles are so long. dow is up 64. let's go to bob pisani. >> we are there. the big ground numbers. 16,000 on the dow. we are there. 1800 on the s&p 500 we are there. and indications are that this will be -- this five-week period from thanksgiving all the way to christmas, it's one of the strongest times of the whole year. on average we're up 4% or so in that particular period. we were up 10% between may and beginning of november. you would have missed out a huge amount if you pulled out. some of those seasonal indicators from the s&p 500 don't work as well. put that up and we'll see what is going on. meantime, discussions are about signs of the bubble. you know the signs of the bubble. this is looking for various
signs of other things here. investor sentiment has been bullish. market is at record levels. we heard this all weekend. there's a reason why the markets could pull back. the problem is, the russell 2000 suddenly dropped in the middle of the month and started to dramatically underperform the s&p 500. this is a one-month chart. everyone is like, uh-huh, that's the sign that's going to tell us and the market pulls back. but it didn't. it dropped a couple percent and then pulled back. everyone is waiting for the russell 2000 to pull back. again, they look for signs but it doesn't go anywhere. you mentioned the boeing and the story what is going on with that. the 777 demand, which is amazing. i think 250 orders for boeing and that stock is opening very
nicely. all of the aerospace names are opening to the upside. finally there were some reports over the weekend that the new york stock exchange and nasdaq were close to an agreement to back up the data feeds, remember what happened at nasdaq? they are trying to figure out a way to have the data feeds back up to each other. my indications, all indications are that they will have an agreement. any feel that is going to happen is not going to happen imminently. bottom line is, all of these people have different formats and they've got to rewrite the codes. which format is going to win here? there is going to be a deal but nothing that is going to happen imminently. you're not going to see a backup system in hand. this is the way to go. 16,027 on the dow jones industrial average. >> thanks, bob pisani. let's head over to the bond pits
and for that we're joined by rick santelli. good morning, rick. >> good morning, david. we all know that janet yellen spoke. the market had one reaction. but if there's one word that describes interest rates in the u.s., it's sticky and they still remain sticky. look at a two-day chart of 5s and 10s. all within a basis point of this 270 yield. maybe it's going to take a bit of a step back and look at what is happening in the markets since october 1st. if you look at the ten-year, make sure you look at the mid-october yield versus the right side and you'll see, as i show the 30 year, the right high is a little deeper. it's not only a steepening bias, they own while they sell the long end but look at the boom overseas as that continues to widen. boy, this chart from october 1st looks nothing like our chart.
they correlate well but the difference between our yields and overseas yields in europe is widening. if you look at the dollar index in that same period, it being looks like the 10 and 30-year chart and that is actually very normal. one area we're paying close attention, especially with the japanese continuing to be in the spotlight of easing and their central bank meeting again this week and that, of course, is the dollar versus the yen. if you look at a year-to-date chart it really is sideways, sideways, sideways. carl, back to you. >> rick, thank you so much. rick santelli in chicago. kelly evans is here at post 9 and walking us through an importantly given speech by one larry summers. >> you've got to hand it, it was november the 8th, the friday before last. even after we heard from janet yellen. here's the reason why. we're coming up with inflation data and fed minutes on
wednesday to find out how seger the central bank presidents were eager. if larry's speech is any indication, the fed may not be going anywhere else fast and here is why. in honor of stanley fisher, larry summers went into a thesis he calls secular stagnation pointing out that a lot of people are looking at japan saying that the economy is half the size they thought it would have been when they were first looking at japan's stagnation saying the u.s. continues to deviate further and further from the size and path in terms of the growth that they would have liked to have seen a couple of years ago pointing out the infrai inflation data. we are both importing and exporti exporting deflation and if you look at the nonfuel imports and exports, the downward price is there as well. consumer prices only going to increase in the range of 1% year on year.
we already know the ecb in europe has surprisingly cut rates when their inflation data guys came in lower than expected. summers made the point that, yes, we saw a bubble in terms of financial services in the past decade. it's not as if there weren't price pressures everywhere else. the trouble is, even with all of that activity going on, the u.s. was barely running at full capacity. if you look at employment and some of the broader gauges in how the economy was doing. so with all of the over stimulus that we had in some parts of the economy, we were still hardly there in terms of the broader growth that people would like to see. where does that leave us this time around? and this discussion and conversation may be precisely why the fed, under janet yellen, specifically, may not be as quick to normalize as the market currently thinks. >> the analogies of japan, though, i want to understand because some were saying it was endless qe that got them into interest rates -- >> the criticism is going to be
people who look at the world through an entirely different point of view and say, no, qe is the problem. that's a hard argument to make when you talk to a group of people that say it's precisely the stimulus, the fact to get it to full employment, the natural rate of interest because of technological change and globalization may be negative, minus 2 or 3%. this is an extraordinary statement to be making. it's going to get people upset and concerned and blaming qe for the problem but substantiating that argument is difficult to make with this crowd. >> with the only problem near the zero bound, jim. >> there's a couple things happening. look where i am. i am at dreamforce. everything behind me is about taking down the growth technologies. customer-minded, remember, in the 1950s there was a period we were very worried and president
eisenhower said we've got to start building roads. we're in a period where the government is not putting a lot of people to work but is firing a lot of people and the federal government has no provided any jobs which is why i feel like the federal reserve has to do what they've got to do but they are up against the president and the congress showing that we're getting the budget deficit down more than you. that is not necessarily the thing to be doing if you're worried about deflation. >> on a lighter note, i'm just sold by s&p that since '91, years where the s&p is up 20% plus followed by another positive year. >> wow. >> since '91. unbelievable. amazon delivers alpha. does netflix have reason to be worried? first, a lot more from jim who is out at dreamforce in san francisco. "squawk on the street" is back in a moment. ♪
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looks like a good week, jim. you're going to have salesforce numbers to talk about as well? >> yes. this extravaganza behind me, by the way, largest inflatable portable structure in north america. took eight hours to blow up. all of this, plus benioff giving his keynote. i think he's going to blow away the numbers tonight.
there's many things going their way. i want to talk about how the target acquisition went. this is benioff's land ground and he has a lot of great companies coming out here. >> what's going to be your first question as you look to him and already had big acquisitions. is this one big acquisition? >> well, what i'm going to ask him is how much creative destruction is there here? we really have disruptive technology going from one part of -- you've got it so that it's human resources being destroyed in terms of the profit margins. you have travel and expenses being destroyed. you've got all sorts of work flow. when i say destroyed, meaning very expensive companies with embedded products and much of corporate america being ripped out. and it's being ripped out by all of the companies building on the platform that benioff has. >> huge part of the economy that does not get talked about enough, jim.
we can't wait for that week of coverage. >> drop box. i don't know if you use drop box. >> yes, absolutely. >> it's a great company. >> amazing tool. it's changed the way at least my wife and i communicate, i'll tell you that. here's what is coming up next on "squawk on the street." >> announcer: coming up, are you still in bed? well, you better hurry up and get moving. six stocks in 60 seconds is up next. you won't want to miss jim cramer when "squawk on the street" returns. bny mellon combines investment management & investment servicing,
six stocks in 60 sticks. bmo says buy ice. >> i think the number is going to go up substantially. >> credit suisse holds on backs siste baxter. >> if you want a bubble, take a look at these printers. 3-d printers have been the hottest area. no one wants to get in front of them. >> nice things to say about deckers. >> it's cold and when it's cold
people buy uggs. pretty simple. stock goes higher. >> morgan held the sell nvidia. >> morgan is saying it's not ever going to happen for these guys. it's a cheap stock but i think it's going to stay a cheap stock. >> tyson beating buy a penny. >> inflationary period, then tyson goes higher. >> hopefully you get some rest today but what is coming up on "mad"? >> marc benioff. ebay, where do they fit? and i've got to tell you, carl, we've got to keep analyzing the companies that no one talks about, which are the companies that are about to become public since the newly public companies have become a big leader in this market. >> we'll see you tonight, jim. it's going to be great to watch
all week long. >> thanks. >> in san francisco at dre dreamforce. simon hobbs is here. >> thank you, carl. 1800 on the s&p. how high can these markets go from here? on the hill today, how do you regulate a virtual currency and how much money can you make if it's an asset. now just 12 days away from the big deadline fix. that's next for hour two on "squawk on the street." nce knew all about a bike accident, just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything.
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[ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. welcome back to "squawk on the street." november national association of home builders housing market index, 54. light of 55 expected. and last month was revised to 54 as well. how does 54 stack up? it's the lowest rate since june, which was 51. now let's call it tied for a five-month low. what is fascinating is between then and now, august read was an eight-year high. so we've gone from an eight-year high to a five-month low.
rates are higher even though the taper never occurred and it continues to be an issue to consider with regard to housing. kelly, carl, simon, back to you. >> thank you very much, rick. we're keeping an eye on major market indexes starting out this monday morning with fresh highs as the dow tops 16,000 and s&p tops 1800, both for the first time. we're giving up some of those gains. the question is, what should investors do here? let's ask the head of u.s. equity. jim paulson and chief investment strategist joining us from minneapolis. guys, good morning. >> good morning. how are you? >> good morning. speaking of quantum of numbers here, is this psychologically important to pass these round-number thresholds? >> you know, i think the new highs are probably more of a psychological or an emotional
barometer. but valuation, as you know, is probably the most important barometer to really assess the health of equities. we still think the market is attractably at these levels. >> what is the key level that you're watching on the s&p 500? >> you know, it's a great question. i think somewhere in the range of 10% over the next 12 months would be a reasonable return target for the market. i think what might be more interesting is what happens within the u.s. equity market, where we think we could see pretty big changes in leadership. >> okay. i'll get into that in just a second. jim, first to you. 10% gains for next year, how does that match up to where you see markets heading? >> i think we could go 10% higher. i think we're going to have a flattish year next year but it's going to be volatile.
one of the things that i think is going on, kelly, is that the money supply is starting to rise for the first time in this recovery. it's risen in every post war history and i think that's starting to occur and historically when that's occurred initially it causes the economy to quick en, stock market picks up on that and it has a great run, which may be driving this stock market higher but once it becomes noticed that the velocity has turned up, the stock market has a fedex fear and corrects. i think that's where we're going to get this next year. we may run up towards 2000 in terms of the global and u.s. economy doing better and then when we find out that velocity is turned up, we could have a correction at the end of the year and end up where we are again today. >> jim, when are we going to have the conversation about the feds? sooner rather than later? >> yeah, i think so, simon.
i think the economic data is going to force the fed to taper sooner rather than later. i don't know if they will get it done before year-end or not. but the stock market is sort of picking up on the idea that when the turn on the money starts to improve, both nominal and real growth picks up and that might be a driving force under this. and i think that we might have to go higher before we get optimism to the point that we need a correction. >> just to be clear, are you saying that the market can rally through a taper from the feds? >> i do. i think that at least leading up to it -- i think that the real important thing is going to be the economy, simon, and the fed, if the economy does well, the fed will tighten but the economy will be doing well and that will be enough, i think, for the market to continue to taper. i think we're going to be more
okay with that than people think. >> we've been checking in with you all year long and the earlier part of this year you were not nearly as constructive as you are now. what changed in the middle of the year and are the dynamics that forced you to change your call still in place? >> you mean, we weren't as constructive on the market as we are now? >> yes. >> i think we've been consistently bullish throughout the year but the areas that we've been most constructive on has been the cyclical areas of the market. i think what happened from may to september may be a microcausem as the fed begins to taper. i think the idea that we're going to see a correction around a taper is a little bit too punitive because really if you think about it, a taper is happening in tandem with an improving economy. so what's wrong with an
improving economy? it's actually great for cyclical sectors. we may see a bond tradeoff between cyclical sectors but the market could continue to climb higher in that environment. so i think we remain constructive. we started out the year probably with a pretty constructive target on the s & p 500. the market reached our target. we increased our target. we've been kind of pretty bullish on equities throughout the year. i think maybe the great gains of this year may not replicate themselves next year but, again, we see more upside than downside risks to the market. >> jim, it sounds like you agree as well. jim and salvita, pretty important levels as the markets try to stay there. thanks very much. >> thanks. when we come back, steve ballmer saying that he's an old emblem of an era and microsoft may need change. what's ahead for the tech
pelosi points to those 39 democrat defectors and says that's not a big number when you consider the politics of the issue. the press conference was inspired by democrats up for re-election next year, coming to the white house really proetest of the obama carroe rollout. you never want to go into an election with a weak hand like this but nancy pelosi was on "meet the press" yesterday and asked about the political impact by david gregory. she refused to really go there saying that there's not going to necessarily be a clear line between what happens now and next year. >> i don't think you can tell what will happen next year but i will tell you that democrats stand tall and support the affordable care act. we have great democrats running who are concerned about our economy and are concerned that
government was shut down because of a whim on the part of the republicans. >> meanwhile, what do those republicans want to do? senator kelly ayotte was on "meet the press" as well and she wants to go back to square one on health care. >> it's time for a rollout which i've been calling for so we can go back to the drawing board and talk about health solutions in the country. >> and the problem, simon, has been all along that there just aren't any apparent bipartisan issues for health care. this issue has become so polarized, that have a do-over for obama care is not really in the cards. that's why you see the white house pushing ahead and not willing to delay any implementation of obama care unless they have to. they know the more weakness they show, the more opportunity they give the republicans an opportunity to chip away at the
president's signature accomplishment, eamon. >> if you can sum it up, what is -- >> it's an eight or nine among democrats. they are really panicked that this thing will not turn around enough in time for them to have a campaign. it's going to be a really ugly 2014 for democrats if this doesn't turn around. >> eamon javers joining us live from d.c. big co bitcoin is on its way to d.c. how to regulate it. up next, we speak to an entrepreneur that is supporting bitcoin. he'll join us live when we return. (vo) you are a business pro.
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test subjects showed no measurable sign of hepatitis c after 12 weeks of treatment. again, showing positive signs. back to you. >> thank you so much. as microsoft prepares for its highly anticipated latest xbox console, its outgoing ceo talking about himself as being an outdated era. our jon fortt is here at post 9 with more on that. >> good morning, carl. >> these people apparently want malowi. >> first of all, i've got to tell you i was slap jawed reading steve ballmer's interview. he'sed
he was admitting that certainly since mulally had been a counsel to ballmer, but given that the board is pushing for change that these other things would keep things status quo. >> slap-jawed on ballmer's comments because you've never seen him that self-effacing before or what? >> co-be a little self-effacing but for him to talk about himself as not moving fast enough and being an impediment to microsoft -- >> isn't he simply saying i've fallen on my sword rather than being kicked out of the door? >> yeah. but here's a guy with abs of
steel falling on his sword just in terps of the way that he thought about himself and the company. i mean -- >> yeah. and then there's xbox 1 coming on the heels of this. >> they put out a tweet at the end of last week, congratulations on your launch to sony and sony says, we sold a million. i wonder if they are still feeling congratulatory. how many of those million are going to be ordering the xbox 1? i think the numbers are good but they are in the era when people are more capable of preordering than they were seven years ago. it's more now. i think we might see a bit of a shakeout in consoles. we'll have to see if microsoft, with all of their marketing power, can come on just as strong. >> we've said that a bunch of times on products and it hasn't happened on hardware, right? >> yes.
and how successful is this device in terms of the strategy direction that microsoft goes? >> i'm actually not sure it's that important. because they need to be strong in tap letblets and phones. xbox live is important but really i think the business division, formerly the business division, the cloud strategy is much more important than microsoft is. >> as we look at stock having done so well in the course of the year, people will be wondering if there's a new ceo, will this stock go up or down? what are the analysts saying? have we factored in change or is there massively more upside potential further down the line? >> i think we factored in change. the question is how much change. sort of like the bank of america note. if there's a lot of change coming, i think people are still possibly more bullish. if it's a little more status quo, they might pull back.
but we expect something different. no more steve ballmer, clearly, even he's talking about taking himself out of the picture. that's huge. also at play here, though, bill gates. exactly how visible will he be going forward with a new ceo? that's going to be an important factor and what does he say about change? >> it's a complicated new job to come into, that's for sure. thank you, jon fortt. speaking of ballmer, he called himself an emblem of an old era. is he being too hold on himself? what moniker should ballmer give himself? we'll tweet your responses later on in the morning. an accept advance by acceptance by retailers as to how bitcoin works and others are trying to do it now as well. mary thompson has a preview.
>> lawmakers are going to be looking for answers on how they might regulate virtual currencies like bitcoin. now, created by computer programs, bitcoin is the best known virtual currency. it's produced by computers solving complex problems. bitcoin has been hitting new highs recently as well as consumer demand in china where bitcoins are now accepted as payments by a number of growing firms. closer to home, though, in brooklyn, new york, danielle lee says five to ten customers likes bitcoins because they carry lower transaction fees like credit cards and hopes that lawmakers keep an open mind. he says it's not greater than
any other types of payments. >> visa, mastercard, american express, inherent risks, cash, i inherent risks. it's a matter of knowing what those risks are and what to do and how to limit them. >> now, advocates of today's hearings are likely to echo lee's sentiments. there are concerns about using bitcoin for tax evasion as well as criminal activity. the hearing starts at 2:30 and we'll be live from there. simon, back to you. >> mary, thank you. backed by former facebook board member and general catalyst partners circle develops products that make it easy for consumers and businesses to use
bitcoin. the ceo jeremy is heading to the hill later today to testify at the senate hearing. he joins us now. good morning. >> good morning. thanks for having me. >> it's a pleasure to have you on the network. so you basically help retailers accept bitcoin, in essence? >> that's right. we're building products for both consumers and businesses. we will make it very easy for them to purchase, store, send in and receive and make payments using digital currency through online services and apps and then for merchants, making it easier for them to accept that at zero percent transaction fees. >> the incentive for the merchant is clear because they are not going to have to pay anything like the 2 to 3% that they might pay for a credit card platform. if i were to characterize this as a gold rush, i guess you are
selling the pics, if you like. you're selling them the machinery? >> for businesses, yes, we want to provide those tools and for consumers right now to get involved in digital currency and to have a trusted, you know, wallet that you can use that is highly secure and that's easy to use in interacting with merchants and making payments, those are critical problems and we're focused on solving both. >> everyone knows this is going to be a very long road to solve this. people can't decide if it's a currency or an asset. because it is a peer-to-peer currency totally decentralized, people feel it's anonymous to use and therefore used in criminal activity. how could you prevent that from happening? how do you make people more visible, if you like? >> i think the regulators did a very important thing earlier this year when the treasury department classified bitcoin
operators as money service businesses. that's exactly what we're doing. we're building a compliant business that needs to comply with anti-money laundering rules. with really requirements that come out of the bank secrecy act. so we're implementing those safeguards which are critical to consumer action and keeping them off the new platforms. >> because for a lot of people, they are still trying to understand -- perhaps you can help -- what is the fundamental point of bitcoin? >> yeah. i think what's happening is we're seeing increased levels of glob glob globalization and the ability to use those as methods of payment and i think really mother fu fundamentally what we're seeing is internet-led disruption and open platforms that have affected every other industry with the exception of finance. it's finally arriving at the
shores of finance and we're seeing an opportunity for that disruption in space. >> and how do you answer the concern that it's a ponzi scheme? interest around the world is clearly building. demand is building but the nature for it, the way that the math works is that the rate of bit coin every four years is going to go down and down and down until you reach a limit and that means that it's going to rise in price. and we're looking at a chart here. bitcoin started the year at $13.55. on friday it was at $437. you know, to a lot of people that looks like a ponzi scheme. what would you say to them? >> look, bitcoin is a very open and transparent technology platform and network. and so it's completely in the clear and people can fully understand exactly how it works. i think the critical thing to understand is, it was designed with, in a sense, an implicit monetary policy which one presumes that there is some
scarcity and it's viewed as a benefit. i think the other thing often misunderstood is that people really pay attention to one bitcoin but forget the fact that bitcoins can be divided to eight digits and what that means is that the last digit on a bitcoin was worth $1. that could handle a market capitalization as 2$2.1 million. it can accommodate a lot of capital coming into it, storing it for assets as well as using instant payments a the no cost. >> so it's an asset or a currency? >> i think it's a currency. it makes all of the key criteria of a currency. >> jeremy, thank you, the ceo of circle. thank you. now straight ahead, the dow hitting 16,000 this morning for the first time ever. how should you be playing this market as it continues to clear new highs? the one and only art cashin will
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in at 54. it matched a downwardly revised figure for october. markets hit new highs today. dow hit 16,000 for the first time. s&p hit 1800 for the first time. art cashin is joining us at post 9. good to see you this morning. >> morning. >> another millenial. what does a round number mean these days? >> the s&p is the one that i'm watching. they hit the bottom. there's a resistant band of 1802, 1805 and they hit the bottom of the bin and got an instant case of vertigo. so i don't think it's going to be anything dramatic. you're hearing more and more about end of year under performance and people getting desperate to try to get into things. i'm going to be watching as the week goes on for the fed minutes. that was the meeting after the september meeting. so they saw what happened in the markets when the markets got
disai disappointed. we may get a sense of the discussion that they had and we feel a responsibility. >> was it just the home builder data? >> no, i think it was a little of that. you had a lot of people remarking on the length of the run. this will be the seventh week in a row if they are up. that's not a very familiar period to have maybe once every couple of years. and so -- you know, a little long in the tooth and i do think that there's some rethink. the benefit is ten-year under 2.7. >> we should remind ourselves that continuing records on stock markets, they are supposed to go up. that's why people invest in them and with inflation and all of the rest of it. how safe do you think retail investors are committing more money now? is this going to be a one-way bet?
>> well, i'm always nervous when people talk about going all in. i think if you have a strategy, i'm a big fan of dollar cost. >> yep. >> and if you do that, when stocks do pull back, you wind up owning more of them. >> can you remind us, i'm struck by how many newspapers are saying is this a bubble? have they always done that or are we more critical of rallies these days? >> i think we are a bit more critical. we have people talking about bubbles but usually we see extremes. now, what has happened is the press has caught on that since we prepared for y2k by flooding the system with money because people were going to go to the banks and pull them out, that produced what looked to be a series of bubbles. we had the dot-com bubble and
then the housing bubble and there's a lot of liquidity sloshing around looking for places to go. most of it is still timid enough that it's staying in the vault at the fed. you look at warren buffett. he just put moneyi in exxon. i suspect that was a way to park some cash and get some return. i'm not so sure that exxon is going to increase by 30%. i think he's looking at safety in a dividend. >> i am getting a growing sense of nervousness in part because a lot of them have had very good years and you don't want to lose it in this last month or so but they are also pointing to earning guidance, in particular, and a lot of them say that this group that i found is not that great. that seems to be a very centered point of concern right now. >> i think it is and one of
those reasons is that management -- corporate management has been excellent. they've managed to do more with less. they've taken profit margins to record after record. they do not keep growing like that. and that's why i think those managers are talking per se how much can they get out of this turnip? you can squeeze as hard as you want. so i think it is that concern that the profit margins cannot continue to grow. you can't cut your weight of growth and where are you going to go? and you've had a good run. as you've said, you're up 25% on the year. very rare occurrence. >> art, thanks for coming by. art cashin. now just 12 days to go until the administration's deadline for fixings healthcare.gov and now members of the president's own party is wondering whether that will be enough time, and that includes our next guest. howard dean and tony fratto.
good morning to you both. >> good morning, kelly. >> morning. >> governor dean, are they going to meet the deadline? >> well, they are hedging a little. what they've said is at the deadline, at the november 30th, 80% of people who go on will be able to sign up. they call that the vast majority. certainly that's a big improvement over where it was but it's not exactly meeting the deadline. >> no, it's not. tony, what happens next in that case? where does that leave us? >> well, look, they may be able to come out and say that they've met their target of one in five having failing to use a website like that. that's not a high degree of success. certainly wouldn't work for amazon or other online digital platforms. that said, they will be able to go and talk about incremental platforms and on forward. some of the bigger problems are not with the website. they are with some of the pieces
like it, like the expansion of medicaid and costs that new enrollees are finding that they are going to have to pay for their plans. >> there's an interesting piece in "the washington post." three described how they got obama care to work in their states by doing state-run ex changes. is that a strategy, that the federalized website is not working but we're going to roll out state-level databases. why couldn't they just pursue that? >> it's too late. the republican governors decided they didn't want to participate in doing that. in the short run, that's one of the reasons we're having all of these problems. but in the long run, that actually hurts what the republicans say their cause is because we're going to have a federal exchange that's going to have about two-thirds or a little over half of the population in it. but generally speaking, i actually don't agree with tony. i don't think there are a lot of other problems besides the website. this system that's being used in obama care is pretty much what mitt romney did in massachusetts
and it worked very well. five years later, 98.5% have the health insurance. it's extraordinary in this country. and people are pretty happy with romney care. i think in the long run this does work but the website is a screw-up. >> you know this, if you can't get sufficient momentum moving forward, actually it might not work. it could collapse back and that is the fear and i would argue that the gop has given you guys the runaround here. on the one hand they say we won't support obama care at the state level. you put it on the federal system and see if your i.t. works on that. and then on friday they are coming back and saying they are substandard policies. let's subspend them for a year. who is going to be based on obama care are the old and sick people with pre-existing conditions. they are running the democrats right, center, and left on this. >> i would agree with that. but i do think in the long run, even though this wasn't the program that i thought we should
have put in, this will work. private sector will work, at least in the short term, and then we have to deal with the cost controls. i do think this is -- tony has raised a good point but for one year, if the young people don't sign up, i don't think it makes that much of a difference. but i think the insurance company -- this was built for the insurance companies. that's a fact. and just as romney care was. and they are going to raise their premiums. >> go ahead, tony. >> at least it was sold that way, governor. you and i have discussed this before. but i think, actually, on the surface doing it through the private sector that way, there is an appeal to that. we're not seeing enough of it and it's not clear that we're going to see enough of that. and the expansion on the medicaid side of this is i think really surprising a lot of people and the numbers are far bigger than what was anticipated, as i could see. and so rhetorically, selling this as a predominantly private sector solution, using
market-based solutions is not working but what is working is the expansion on medicaid which we know, unfortunately, is producing not really great outcomes for those using medicaid. >> i disagree with that very strongly. as you know, we've had universal health care for everyone under 18 in this state for 20 years and we did it exactly this way. and medicaid, in fact, can produce very good outcomes and much better outcomes than trying to get your health care in the emergency room after you've let something languish for two weeks. we've had children in vermont grew up with health insurance universally. it can work and i think it will work. >> just to go back to the health care exchange, the democrats have squandered such political capital where really it was the gop taking the public ire and now as we head to 2014 suggests a need for a unified and a
message and strategy here on the democrats part. what is your recommendation as to what that message, that plan needs to be? >> my message is washington is what they are incapable of taking, which is stop thinking short term, get yourself together, stop being afraid of elections and do your job. what you see in washington is a panic of the democratic side. >> it's 12 days. it's understandable that there's a panic. it sounds like it's a self-imposed deadline that they are not going to meet. >> it's not 12 days. it's three months. if this thing works by march, we're going to be fine for 2014. but it's 12 days because they set that up. stop panicking and do your job and this will come out right. >> tony, final word? >> i was just going to say that the november 30th deadline is not the deadline. it was october that was the deadline. that was an extension of the deadline. we're not failing to meet success of deadlines. that's the problem. >> one of them.
tony fratto, governor dean, it won't be the last time that we discuss this issue. thank you. >> no. if you think that something like this can only happen in the city of detroit? think again? many cities are on the brink of bankruptcy and find out if your city is at risk. when you have diabetes like i do,
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go usa! >> go, usa! >> go, usa! thank you think detroit's bankruptcy was unique? think again. years of economic problems are trickling down to the local level leaving a lot of our cities in critical condition and one of those cities is oakland, california. our scott cohen is in california with more on that story. good morning, scott. >> reporter: good morning, carl this is not an upside down version of our state feature. this is a look at cities that each in its own way is facing a problem that is em blblematic o
lot of cities. it would be doing better if not for a bad bet on wall street. we take you back to 1997 when goldman sachs, that is, sold city officials on a plan to refinance half a billion dollars on variable rate bonds. they locked in a low, low rate of 5.67%. hey, it seemed like a good deal in 1997. but, of course, rates went down, not up. and oakland is now paying go go sachs $4 million in interest rates and have to keep paying in 2021. they will let them out of the deal but they have to pay $15 million. >> we've tried to negotiate with goldman sachs and i have not totally given up. we want this buyout more quickly and less expensively.
>> now, goldman sachs declined to comment for this story but ceo lloyd blankfein said essentially a deal is a deal. it's not just oakland or goldman sachs. there are hundreds of these contracts out there and citi has been paying in what was a lucrative business for wall street back in the 1990s. we have a lot more at cnbc.com/cities. you want to go there and see a lot more about our coverage today and all of this week. coming up later on "power lunch," we'll introduce you to someone in oakland who has a unique perspective on all of this and we'll tell you what our destination is. a hint, it has a lot to do with the very thorny issue of municipal pensions. we'll take that up tomorrow, five cities, five days all this week. simon? >> it's going to be an interesting week. scott cohn there in oakland.
coming up, creator of a health portal who claims that his website does what healthcare.gov hasn't been able to do. find out what he's talking about later on. we'll be right back. the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. so i knit until it was full. you'd be crazy not to. is that nana? [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex.
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16,000 on the dow. let's link in with rick santelli for this morning. exchange. good morning, rick. >> good morning, simon. well, for many of you out there, maybe you've read books like "the monster from jekyll island "but was everybody understands this is the 100-year anniversary of the creation of the federal reserve. and in chicago, in particular, anybody who has visited the great exchange i'm standing in the, cme group, formerly the chicago board of trade floor, this wonderful building, art deco, 1930, across the street is the chicago federal reserve. for this 100-year anniversary they've put a lot of decorations and pictures up all around the building. one picture caught my attention. i like to put it on the screen. a century of service, saving for
our future. i'm sorry, but this one really sticks in my throat every time i walk by the building. this is one poster i wish they wouldn't have put up because, in my opinion, much of what's going on with the federal reserve, whether it's quantitative easing, whether it's ultra-low interest rates, whether it's paying on reserves, as excess reserves placed at the fed, all of it, in my opinion, pulls from a group known as savers. they are the collateral damage. they are the group that, in many ways, is part of the bankroll so that monies and capital can be refundled remanaged and reapplied in other areas. and as you take another step back, one of the areas that's definitely showing some improvement, of course, corporate profits in the stock market. on the backs of many savers. i don't know, charles evans, i think that's one poster that would be best rolled up for maybe the 200-yeanniversary.
people out there, ron paul, libertarians believe we don't need a federal reserve. i think we can have a healthy debate been awe realistic debate, it's never going to happen. 0 so try to do thing in the future that improve what we have. one maybe crisis management. i don't see a crisis, i don't see normalization, that's why the n-0, is capitalized. obama care in the headlines today. there's a lot of issues regarding obama care that aren't true, a lot of issues regarding normalization and the fed and janet yellen and some of the things she said that shy don't see. something you never had before is going to present an exit that's quantifiable or transparent. like obama care, we can make ex-excuses but next time you have an issue with bureaucracy or you missed a deadline, or i'm
sorry, people below me, my accountant, excuses are a one-way street when the government's at one end and private citizens at the other. let's have less collateral damage, more marshal normalization. i think the markets are rising to the occasion, most likely it's not a pretty normalization for interest rates. back you. >> thank you, rick santelli. it's tweet time. microsoft's steve ballmer calling himself an emblem of an old era. perhaps he's being too tough on himself. what monica should ballmer give himself. we'll air your responses throughout the morning. tdd# 1-800-345-2550 searching for trade ideas that spark your curiosity tdd# 1-800-345-2550 can take you in many directions. tdd# 1-800-345-2550 you read this. watch that. tdd# 1-800-345-2550 you look for what's next.
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welcome back to "squawk on the street." the list of solar companies have seen a surge as of late. china-based company reported earnings that blew away estimates on sales better than expectations on the heels of better delivery. jinko boosted current quarter and full-year guidance. up 15% to session highs. >> thank you. squawk on the tweet. steve ballmer calling himself an emblem on an old era.
you, our viewers, can do better than that. david writes, i was the soft part in microsoft. the embalmer. and jim wrights, i'm a pc. have -- they have no filter when they sent these things in. >> those are the filtered ones. >> you're right. creative. dow's up 58. i'm watching g.e., go back to levels of september 2008, closing in on $28, david, before long, i mean -- >> talking 60, 59 -- >> almost halfway back. >> 45 times earnings then, not now. people still happy with what were those earnings and industrial orders, but it has been ever since the earnings report the stock has been up sharply. quickly wanted to come to yahoo! and note that stock, i think, a new i around 36 bucks a share.
talked a lot, when we talk about yahoo! the increasing value of ali baba. aa hugh, japan. they own 35% of it also contributing. the question is, if and when it will be the core business bewe' talking about. >> unbelievable tailwind for marissa mayer. if you're just joining us, what you missed earlier on. >> welcome to "squawk on the street." here's what happened so far. >> we could have the driving off the cliff and the spiral joe talked about, or we could, a couple years from now and say, what were we thinking, of course we needed to find way for people to go on individual changes for health care, of course it was messy but we're in a better place now the product we get for the 1.5 trillion will not be universal coverage in ten years.
it will still be 35, 40 million people uninsured if obama care works perfectly. >> what i do fear is right now we are in that period where there's a group of stocks lost the moorings of what we regard as being traditional valuation. and that's never a good sign. ford reported really good numbers, ma lally stock didn't go up, may be headed out to revolutionize microsoft. baurm ballmer's comments say he's too old. if you want old, mulally will give you old. >> opening bell. >> we're there. big round numbers, oh, 16000 on the dow, 1800 on the s&p 50 oh we're there. >> we may run up towards 2,000 on optimism the economy, global and u.s. economy's doing better. and when we find out velocity's turned up and the fed's going to have to exit quickly, we could have more of a correction later in the year, maybe end up where
we are today again. and good morning. live here the post nine at the new york stock exchange. let's begin with a quick check on markets we did see key levels hit in the opening session. still positive, s&p adding a point or two, sitting at 1800 level. the dow just 16000, mostly psychological. tyson foods rally, fourth quarter earnings beat an lit analysts' estimates. shares of super value, down. goldman sacs, citing cuts to the federal food stamp program and growing ining competition. a big knock to those shares down 7%. >> all-time highs. dow crossing 16000.
the s&p over -- actually right a1800. how long can the party last. the clock is ticking. less than two weeks away from the november 30th deadline to get the obama care website up and running. if it misses the deadline, is the health care law in serious trouble. one card to rule them all, one company looking to simplify your wallet and make juggling a bunch of credit cards a thing of the past. >> we begin, as promised, with the markets. another look at dow, s&p 500 hitting fresh record highs this morning. daniel morris, global strategist and david katz, chief investment officer. good morning. >> good morning. dan, first to you, you look at markets here, we've hit new psychological levels how important it is really what are you watching now? >> you want to go back to earnings because that's what. going to drive stocks. the degree people are nervous, expecting to some degree a correction in the markets you want to ask, where will that
come from? a change in sentiment, a change in monetary policy or earnings outlook? for all of those right now, it's benign. we think if you look attornings in that consistently seems to be a strong forecast next year, it's a good environment. >> how much further do we have to go? >> we don't want it to go too far. valuations are reasonable. nice to see a flattish market, to be honest, so we don't accumulate too much more that we ultimately have to give back when monetary policy tightens. >> conversations about seasonality. we watch that thing this time of the year. have any gains this year altered what we normally see? >> well, generally if the market's up in the first ten months of the year, more than 10%, it generally has done very well in the last two months of the year. you've had a strong start to november, so maybe you get a little bit less for the last two months history should argue, market should have an upside bias for the remainder of the year.
>> counter views say you want to be nervous in the early part of a new fed chairman's tenure, do you buy na? >> we say the market's had a great 2013. our expectations for 2014 are a lot lower because the new fed chairman's part of 0 the old fed regime, we don't think there are radical change there's. she's got a strong incentive to unwine the qe program as the old chairman would have. we think the market should do modestly better, return to the historic averages, 9% to 11%. >> dan, most people when we talk about potential stumbling blocks will first say the fed. if you look at history if you look at last cycle, one before that sure there was some volatility by the time the fed began to raise but hardly the end of the bull market. is this time going to be any different. >> i think the challenge now especially when we look at historical comparisons this is an historical time. you haven't had episodes with quantitative easing. this time if you look at what
you expect in terms of the attitude of the fed towards the market, it's more likely they're more cautious than normal because of the fragility in the market. less risk from that. but certainly will have a big impact. >> david, look at some of your picks. caterpillar, capital one, mcdonald's, can't say you're not looking for bargains? >> these are all great businesses and they've all led for 2013 rally. we think if the economy's still on the mend next year, all of them should play a good deal of catch-up and well positioned to do beter. mcdonald's had analyst day last week, pretty mediocre. we think the yield is so good and p/e reasonable, they should do better, if business is any better than a very low bar. >> going back to this question whether if the fed is back in the picture, trying to exit or tighten, is that a problem? would you subscribe to what dan said here, this time is different? >> well, it is not den but if you look at historical times when the fed raises rates, the
first move from like the one to three or 3 1/2 percent level is relatively healthy as long as it's done for the right reasons that the economy's getting better the market can withstand it. if interest rates move from 4% to 8% which should be a few years out, that would be a concern for the economy and that's a concern for the stock market. but we think that's a ways away, howl not fact into 2014. >> in 2014, do you think the u.s. is going to look attractive versus europe, asia? is that a key question? >> there may not be as much differentiation. it's driven by two things, one look at valuation, differential between the two it's not that big, it's not a huge opportunity between the two. i think both generally positive. maybe not as big a gap as we've seen in the past. >> convergence. dan, david, thank you both. >> thanks a lot. when we come back, is it make or break time for obama
care? right now we're a couple of weeks away from the administration's self-imposed deadline to fix healthcare.gov. is the law in trouble if things are not any better by november 30th? we'll get answers after the break. ♪ ♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement. visit a branch or call now for your personal retirement review.
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their part to help really set new record highs for the dow, the s&p, and among the best performing stocks in the s&p 500, industrial sector, precision cast parts the maker of custommentle components from aircraft, turbines, medical devices up 2%. aerospace defense contractor boeings up that much as well. northrop grumman has a presence at the air show, up on the day as well. will round out the air theme delta airlines one of best performing airlines in the industrials up by around a percent and a half as well. back over to you. >> thank you, dom. now, it's crunch time for obama care. the end of the month, the deadline to get the website working, is fast approaching and the white house doing all it can to keep nervous democrats at ease. eamon javers with the latest. >> 12 days until the enden of the month, that's the white house's self-imposed deadline that you've talked about, in
order to get healthcare.gov up and running. and at this point, this is starting to look leak oike one political disasters like the bp oil spill, a big national. problem, everybody can see it, not much the white house can do other than applying increasingly frantic pressure on those people trying to fix it. until the technical problem's solved here the political problem's going to continue. watch nancy pelosi yesterday, on "meet the press "asked about the website problems. there's not that much that the politicians can do to fix the technical problem. here's nancy pelosi yesterday. >> i'm very unhappy about the website, as you can imagine the president is. but i know the makings of the legislation and what it does for people and, again, look, this republican measure on friday, what makes matters so worse, allows the marketplace to be
deprived of people who should be getting lower prices with better benefits and perhaps even a tax credit that want a fix. it was a make matters worse. >> just not that much the politicians can do to fix the technical aspects of it. they're going to fight over this for the coming days and weeks. but until they get it fixed, the obama administration's got a big problem on its hand. republicans are poised to bounce, turning around a political dynamic against them during the government shut down, going very much in their favor. >> eamon javers in washington, thank you. what needs to be done to fix the website? can it be done by the november 30th deadline? ray be-yo bjorkline. good morning to you both. >> good morning. >> ray, you know, listening to the president last week, he has
learned, late, but has learned not promise absolutes on a given date. what do you expect at the end of the month? >> i expect the website is going to be far better than what it is today. we all see that the performance is increasing. but is it going to be completely fixed? absolutely not. there's still going to be glitches. this is a very, very complicated technical project that the government is undertaking. it's not going to work that easily. >> peter, he does say, he has experts working around the clock. we've got some big titans from the private sector coming in to try to help. in layman's terms, explain what they are trying to do at this stage. >> the goal of the website is to make obama care as understandable as possible and as easy to access as possible for the average person on the street. these are very complicated earns when it comes to picking an insurance plan. many people going to be getting
insurance are going to be getting insurance for the first time, so the website needs to focus on creating that clarity and that access. that people are photog need over the next several months as they continue to enroll. >> i want to ask about medicaid. this is getting more and more focus as people understand this is one of the part of the implementation working but are concerned about the cost. the cost to states, is it the federal government is, i understand, going to be bearing the cost of the medicaid expansion for the first decade. >> bearing the vast majority of the cost for the first decade of the medicaid expansion. normally what happens in medicaid it more of a 50/50 split in the larger states and some states do better than that. but it's part of obama care and part of getting more people into coverage, the federal government said that they wanted to take on this full cost for the medicaid program so that's what makes it so interesting when you have
some states who say they don't want to take advantage of those federal dollars to help their health care system. you have republican governors who don't want to expand medicaid because they're worried about the federal promise there. >> ray, what about the cost of that program, even at the federal level, which will be swallow just by the size of the federal budget, but it's still significant, is it not? >> it certainly is significant. i'll defer to peter on the overall cost of the program. i can talk about the costs of fixing the website. i think that there's an overblown impression of what the website has cost. but it probably should have cost maybe twice as much as what has been talked about which is anywhere from 60 million to 640le. . it's a very very complicated undertaking. >> peter, circle back to the point of the cost of the medication expansion to the
federal government. >> it's a cost to the federal government of what's happening in medicaid over the next decade, we'll be in the billions and trillions of dollars. but the point of the investment is to help people get the coverage that they need and to make sure that the providers and the safety net providers offering that coverage are going to be there, be able to keep providing care. >> finally, ray, the president did talk during his press conference last week about how i.t. projects are something the government just does not do very well. does anything change on a broader level after this experience for them? >> we would hope it would change, but i anticipate that it's not going to change for quite a few years. the world of technology has really advanced we're into the world of agile development, open systems, and the federal government's government contracting structure, program management structure is not well
suited to take on that kind of flexibility that's the unfortunate part of. i think what's missed here is the ability to have somebody that's fully accountable in the 47 or so contractors that are responsible for fixing the site and actually in development. it just is an enormous problem. >> anybody who has worked in procurement especially in government knows how that works. ray, peter, interesting. see what the end of month brings. thanks for your time. >> thank you. >> plenty more on the obama care website later this hour. we'll talk to one programmer who built his own site to make it easy to find cheap health care. the government talked to him over the weekend. today, he's talk to us. that's coming up in just a bit. now, amazon counting on originals after its political comedy series "alpha house" premiered last week. reviews not flattering. does amazon have what it takes to beat netflix at its own game?
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♪ amazon went to the war over the weekend with netflix making the first three episodes of the first three series called "alpha house," available for all customers for free. whether amazon can beat netflix at its own game. jas enlynch, a tv editor. good morning. >> good morning. >> mark, first to you. your impression of how well the series has done with viewers and whether this changes the game for amazon. >> it's unlikely to change the game for amazon. we did watch the first episode of "alpha house."
amazon's end game is different than netflix's end game. amazon is trying to get people to sign up for the prime program. with that end game in mind they've been successful. as a standalone content creation company, chances we think are pretty slim. >> jason, what about you? a smart move as far as amazon's concerned or do they need to do more? >> absolutely. this is a first step. they have to play catch up with netflix and netflix is a year ahead of them in the on series game. so for them, this is just their first step into original series. and i think that although it's not as good as something like "house of cards, it's very promising. i'm interested to see what amazon does after this. >> mark, tell me about the economics of how this plays in. how much advantage does amazon get if this is a hit if it gets marginally more people to sign up for prime, how does that flow to the bottom line? >> so, some things aren't disclosed by amazon.
two major data points, we think they're spending up to a billion, amazon, on all content, mostly purchasing content available to other people but some of that exclusively and for original content, a small percentage of their spend. we think they're north of 10 million prime customers in the urs, closer to 15 million. what we do know, based on survey work, prime customers are extremely loyal to amazon, spend three, four times as much as a nonprime customer. anything to lock in prime customers is good for amazon. the question is whether generating original content? why not lower the price of prime. >> what's your expectation how sunday delivery's going to affect that also? is it going to make the existing folks more loyal? draw more people to prime? >> absolutely. you're increased by whatever that is, 15% the number of days that amazon can deliver packages, too. clearly, the more you can
deliver packages to people on time, within the day's notice or two days' note this, the more products they buy from you. one is consumer staples, second fashion and apparel, huge growth ways for amazon. one of the major reasons we like the stock. >> investors are willing to give amazon a long leash when it comes to costs. whether it's marketing costs, licensing, production, if they own some of the stuff outright. when does your patience run thin, if we don't seem to be getting the prime payback that mark talks about? >> well i think, again, you have to -- you have to look at what amazon has in the pipeline and "alpha house" is the first of self-series they have lined up. i think this is promising enough that i'm interested in the next series. interesting things up next year, including a show that's produced by cris carter who did "x-files." i'm willing to wait until that show. i think there are treeging
things out there. i'm willing to give them time. >> to either one of you, it makes it hard, nobody knows when to answer, maybe, mark, take it first, is sunday delivery like a regular retail store being open an extra day? that is how we should think of it? when not delivering, is that like being closed? >> that's a very good analogy. again, it allows amazon to -- amazon's the ultimate basket expander. when people first went to amazon they thought about books, music and videos and over time the basket expanded to include consumer electronics. the bigger the basket, the more lock in they have with customers, the more useful they are. sunday delivery allows amazon to become more than the walmart of the web, but down the reeoad th next walmart. >> bezos learning about the
newspaper business quickly. but i mean there are going to be tough lessons and learning how to mark a new show, how to make noise, as they say, in the television business. >> absolutely. and they have been doing interesting things so far. even picking alpha house as their first show, they put 14 different pilots on their site last spring and invited consumers are to give them feedback. that's something you do not see on that scale. now we'll have to see whether the shows that the consumers picked hand in hand with bezos and his team do well for them. but it's an interesting way to go about it. >> netflix shares this morning, down 1.7%. amazon, slightly up. that's the market's verdict. >> have you seen the show? >> i haven't watched it. i'm seeing john goodman play a politician. i want him to play rob ford. i think he's got the background, right? >> i'm not sure any fiction can match the reality playing out in
toronto. thank you very much, jason, mark, with the views on the new siris. steve ballmer giving a wide-ranging interview to the "wall street journal" last week. what was it like talking to ballmer as his time at microsoft nears an end? we'll speak to the reporter who wrote that piece in a few moments? the bell's about to sound across europe. yes, your european close in three minutes. (vo) you are a business pro.
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the european markets are closing now. >> welcome back. time for the european close. simon hobbs is back here. >> thank you very much. we're green across europe. off our highs. i want to point out on italy, a marked outperformance. can you see that, up 2%, in the bottom right-hand corner? we'll come back to italy in a moment. on a day in which europe is generally rallying picking up on coattails of china and what wall street did at the end of last week. germany fresh all-time record today partly because of the big energy giants coming back from the big losses. aeon, all about thousands of job cuts and profit warnings. today they're high somewhere helped the dax hit the record. talk about italy and the reason you have that 2% gain. led very much by the banks, as you can see. the big industrials are also higher today. one of the major reasons that
they have gained is they're sit on a lot of italian debt and italian sovereign debt continues to rally. remember yields go in the opposite direction. where you've seen a sell-off in treasuries here in italy the yields go down, continue to rally on the price and two major reasons for that. one because the economic situation is so dire there, but also because over the weekend, there was a further splinter of the center right with berlusconi. leaving the incumbent government clear to run and in na reform. a finance minister's meeting at end of the week. one more, aberdeen as set management, which you may know, one of the big money managers, taken over some of the scottish widow assets from lloyd's at a cost around $900 million. that means aberdeen is the largest quoted money manager. that means they're better able
because assets are more diverse to take on likes of the big american players. i can see in the corner of my eye jumping up and down. are you excited? >> i am. i was going to say, explain we're not talking about scottish widows literally so much as -- >> no. some of the assets under that brand. >> yes. another big firm. aberdeen on a tear. 14%, as they continue to grow. >> i love it when i make you excited in the european close. it makes my day. i'm going home. good-bye. >> enjoy the rest of it. bob pisani with a look at what's moving on the big board. >> big round numbers. we played it in the s&p 500, 1800. dow jones industrial average 16000. didn't make it yet for the nasdaq at 4000 but getting close. great stories in china, you know. china closed friday. so they didn't get the news on the stock market about easing one child restriction there, boosting private investments and property reforms. but look at china, up strongly.
india, emerging markets, brazilian market open china stocks to trade, all sectors, airline stocks like china air, telecom, internet spate, china petro, life insurance. across the board, china stocks on the upside. housing stocks up. in line, nhb numbers, sentiment numbers, in line. i talked to zillow ceo last week, pricing is stabilizing. right now good news for the market after priced moved up. a nice move up in some of the housing stocks. aerospace stocks on fire. why shouldn't they? boeing knocking the cover off the ball in the dubai air show. not only taking orders for the 777, but big, new orders for the 787, big, new order for the 737. seven-anything is getting orders and all of that is resonating through the overall space. on the whole issue of the bubble talk, dominated all of the discussions over the weekend,
everybody's looking for some signs, what can they do that will indicate that finally the market's starting to deflate a bit? two week ago the russell 2000 was underperforming the s&p 500 and there's the green line. that's the russell 2000, a one-month chart, s&p is white line. everybody said, aha, this is the sign we've been waiting for. we'll short the market because we think this could be a trend. we've been waiting for this sign. they did. and it didn't work. that's the problem with this. we are overbought but we're not showing signs of anything breaking down. guys, this was one of the big signs, wonders, that you've tried to read in the market. when the russell underperforms, usually that can be some kind of sign of a trouble for the market. the problem it works for three days and every trade everybody puts on to short things falls apart. that's what's going on all year. >> frustrating year for sure. thanks a lot. bob pisani.
meantime, as microsoft searches for a few ceo to replace steve bau pa ballmer, "wall street journal" spoke with him. jon fortt is here on set. monica, good morning. >> good morning. >> great piece. fascinating. i guess since we're talking about an interview that everyone wanted, the question is, how did you get it? >> well, it took a bit of work, thank you for enjoying the piece. i talked to him for a couple of days and the redman campus in washington state, and it was a fascinating couple days, i have to tell you. when i first went in his office, i expected corporate answer to this question, i said, are you sure you really want to leave microsoft, steve? and here what happens he said. am i sure i want to leave personal personally? no. is it the best thing for microsoft? yes. i knew from then on this man would be honest with me and get
to the bottom why he left when he said candidly he wasn't sure he wanted to go. >> how different was steve ballmer in those conversations from the steve you had seen before? i mean, just that initial exchange is so different from anything i've ever seen from him. he identified so closely with microsoft. >> that's right. and you know he is known for his bluster and he still exhibited a lot of that. one point i'm talking to him and he almost jumps across the table at me and goes, charge! we're still going to keep on! i went to store zero, where they test marketing and things like that, he was -- he ripped a phone off the stand and said, i don't like the way this looks. he still exhibits a lot of that very, you know, type a personality at microsoft. on the other hand, he did get reemotional at several types in the two days i spent with him, his -- he was tearful.
this is like his fourth child to him, he said. and in this case, he's leaving the house, microsoft, to walk away from a company where he's been integral for 33 years. >> of course, the question on a lot of people's minds, money character it's offtopic, knowing how well you know the company, and know him, who replaces him? do you think mulally is a legitimate candidate? >> i think he's a very legitimate candidate. i think that he has become such a guru to ceos because he's turns around ford. and fuelly ll actually i have a the story mulally talks to steve ballmer on christmas eve in seattle at a starbucks and starts telling steve ballmer, here's how you can help turn microsoft around to make it more consumer oriented because that's the big beef the board had with steve ballmer, he misses the shift into the consumer areas
although steve ballmer gets a ton of credit for driving microsoft to be this proffer machine, you know, with its dominance software and enterprise business. i think alan mulally is a strong contender with a couple others that are technology oriented. >> can't help but notice bill gates has reduced his stake in microsoft tremendously over the past decade, decade and a half, steve ballmer has not. there's speculation now that he's out of the ceo seat, he might. what do you think? will he be microsoft's largest shareholder in a year or two if gates continues reducing his stake or is ballmer going to sell out? >> no, i don't expect ballmer to sell out. in fact, i think within the next few months if bill gates continues the way he sells his shares, so he can devote more to philanthropy ballmer will be the largest shareholder in microsoft. i was at one executive meeting with ballmer and his top
managers and he said to them, this is hard for me i want to stay your ceo, he goes, but i own a ton of stock and i'm going to keep it until i die. and then he turned around and whispered to them, please take good care of microsoft. >> man, this is like a drama, monica. >> it was. >> one last question. i mean, obviously, we don't know much until the new person is named but there's a lot of people on the street who envision a microsoft that will be broken into pieces where units can operate better together, closely together. do you think that's going to be a reality? >> i don't know. i mean the board has endorsed this plan that ballmer came up with which is a shift into hardware, you know, the phones, finalized the deal with nokia to buy their phones and mobile business. and so if they were to start selling off those pieces, that would be changing the entire strategy that they've endorsed from ballmer.
however, a new ceo could come in and say, this is what i want to do, and i think the board's going to be very open to what a new ceo wants to do. but it would be a shift from what they've been working toward for the last several months which is, making microsoft more dominance player, not just in the software, which it is formidable but also in the consumer area. and it wants to continue to beef up being the search engine and that kind of thing, and the xbox, as you know, is coming out this week. an interesting thing is the annual shareholder meeting is tomorrow. we'll see what they say tomorrow. >> i thought the story was colorful, but monica, you added a lot to. thanks for your time today. >> thank you. >> monica langley with the "wall street journal." ballmer is the subject of squawk on the tweet question. told monica emblem of an old era. we're asking you what moniker should ballmer give himself. we'll get your responses later on in the morning.
for sowny's new play station. xbox debuting later there is week. taking on twitter, another sell rating pushed the stock lower. someone says it needs to take a hit now, and why that's a good thing for investors. all ahead at the top of the hour. as americans try to browse healthcare.gov they run into several common problems. before they view rate information rusers must sign up but the site shuts down when they do. many have trouble getting past the stage. three young programmers are helping tacking the program by building unaffiliated site that acts as a free guide, letting users view plan information. joining us san francisco, george, good morning. >> good morning. >> you're telling me, in the span of a few weeks, you have essential lir created from
scratch a work around this huge problem? >> well, yes. but what we did we took the data publicly available on healthcare.gov and just put an easier interface on top of it. >> how hard has this been? >> took plea days to build the first version and since then a couple of weeks on it. data was there, it's making it easier to search and find plans. >> and so, if i'm on it now, does it allow me to do what healthcare.gov wishes it could do by itself? >> not entirely. you can't sign up or receive a subsidy through our site but we'll put you in touch with the insurer to buy a plan directly. >>fully word from the white house on this? >> actually, the department of health and human services reached out to us, we may be meeting the cto, brad civic today. >> walk me through some challenges you had in putting this together, because obviously it's going to be seen as a marked contrast, your innovation, your able to work quickly, versus what's gone
wrong on -- at the white house and in washington. >> well, it actually takes a fair amount of work to make something that's easy to use. so really what we did, we looked at work flow that healthcare.gov was using and saying what steps could we subtract? how to make this easier? there was a lot of adding by subtracting going on and obviously it was a challenge to scale up because we've had over 500,000 visitors in a couple of weeks. >> george, what's interesting about this, again, to go back to the problem that's plaguing healthcare.gov, is it a question of getting the website up and running and that being part of it, you have kind of taken care of that, pointing to flans or is it the infrastructure connecting people to different government agencies, checking to see who qualifies based on income level, for example, for a subsidy, matching irs records, isn't it really that that's the harder piece of this to get to work? >> kelly, definitely that's true. we have a subsidy calculator built into the site.
it's a fundamental question of approach. if you try to simplify the process, really what you get from us from the health sherpa, where are you? here's what's available for you. the government's trying to sign people up, validate income, check immigration status. when you do all of that in one place it gets complicated. >> the point is that website, malt ultimately has to enroll people if it were only so easy to say based on the data, here's what you're likely to go. >> couldn't agree more. and again if you don't qualify for a subsidy, there's no reason to go through healthcare.gov because you can purchase a plan on the open market. but we do actually pass people off when they qualify for a subsidy because it's important that they receive that, they go through the formal process of healthcare.gov. >> george, do you think the experience of healthcare.gov would have been any different had they brought folks like you into the fold earlier on?
>> so the team that actually put -- that is working on healthcare.gov now is very competent technically. i think the missteps were more a result of policy choices around forcing people to sign up before they could see rates. so i don't necessarily think it was a question of technical competence. >> the convergence of the technology versus policy, a recipe for trouble in a lot of people's minds. george, fascinating. can't wait to hear how your meeting with hhs goes. thank you. >> thank you. >> healthsherpa.com. ever get sick of juggling all credit cards every time you leave the house? next guest is looking to make that a thing of the past. he has a device that combines all credit cards into one piece of plastic. we'll show you how it works when we come back., get paid to do something you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you
welcome back. chances are your wallet is bursting with all kinds of cards, credit cards, reward cards, business cards. today's squawk breakthrough, making a credit card sized device that aims to be all in one. it stores all of your account information for any card you used, it's called coin. joining us, the ceo and found of coin, live from san francisco. good morning. >> good morning. >> you no it's interesting, this
is an idea that for many people they say why didn't we have this five years ago? what have been the challenges in developing this kind of product? >> the challenges have been quite vast. first, technology, we have to figure out a lot of supply chain issues and solve some of the core problems. second it has been making the experience perfect. and we've gone through a lot of testing and feedback to make that just right. >> i bet you have. explain to people how it works. is the point that you take all of your credit card information and upload it to this new device? what happens at the point of sale? >> it's quite simple. when you get a coin, you use the mobile app to load all of the cards, credit, debit, membership, gift cards. once you load into the app, it's secure. transfer over the ones you use daily on to a coin. there the coin works autonomously. when you reach a cash register, pull it out of the wallet, wherever you keep the card, hand
it over to the cashier as if you're using plastic. >> what point during that process do you select the card that you're using? do they swipe it like a regular cred id card? >> great question. before you hand it over we have a screen on the device which tells you which card is selects some you can toggle a button and go through all of the cards you have until the one you want shows up on the screen. then it would swipe on the register like a normal plastic card would. >> talk about what it's like working in the space you're in right now. i'm thinking about google wallet, thinking about square. you, yourself, have worked at ebay and paypal. mobile payments, it's like a land grab here. i wonder if you feel the heat, so to speak. >> working in the space is really exciting because everyone in the space is really hot. so my past experience led me to this project because what happened is when you make a solution that is mostly purely based on mobile, you need to both replace how a consumer
behaves and how a merchant behaves. it's difficult because people need to use the same technology when they meet up. >> it's like a series of infinite number of arranged marriages, right? we all have our different motives and habits and i may want to pay one way but a merchant may not see it the same way. >> you got it. you got it, that's a challenge. >> you're hoping to come to market when? >> we're going to come to market in summer 2014. >> for $100? people i understand if order it now can get it more cheaply. >> exactly. a preorder campaign, discounting 50% for early adopters. >> how many early adopters are there? >> you know, we don't know the exact number yet, but when we launched the campaign we sold the amount we wanted in 40 minutes after the start. >> wow. can you give us a rough sense, hundreds, thousands?
>> talking thousands. >> okay. and finally, when it comes to the business model ultimately that is going to sustain all of this, if it becomes widely adopted, are you selling the device? do you take a share of future transactions at all? >> it's just the start and there's 200 million card holders in the united states alone. we have a long way to go before we saturate the market. so we're taking it step by step for now. >> all right. we will be watching those steps. thank you so much for joining us. a fascinating new product. my friends have been buzzing about it. the ceo and founder of coin. thank you, sir. >> thank you for having me. want to get back quickly to steve ballmer, the subject of our squawk on the tweet subject. he called himself an emblem of an old era. is he being too hard on himself. what moniker ballmer should give to himself? tweet us. answers are next. i see a world bursting with opportunity,
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[ male announcer ] fedex one rate. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. squawk on the tweet this morning. steve ballmer calling himself emblem of an old era.
you, our viewers, can do better than that. what moniker should ballmer give himself? alec, the lit ballmer. christopher, master of his own domain. brian writes, steve ballmer #at leasti'mnot thorstenheins. dow hangingen to a narrow range, 42 points. retailers posting, abercrombie & fitch. they come thursday. and the biggest gainer on the s&p, george soros, showing funds have taken a small position in abercrombie & fitch, which has been challenges of late. >> hedge funds love to play in the retail space because it's easy, do your own research there. but abercrombie, the teen retailer, being one of the hardest hit this year. >> ge we mentioned. you were watching. what else? >> sony. >> sony. >> after the playstation launch,
going in, talking about microsoft today, but sony's up 2% trading here. numbers could make it a tougher climb for microsoft. >> 1 million ps4s in the first 24 hours. some of the reviews, some good, some not as good. >> a few glitches. >> headquarters. scott wapner and the halftime. >> game on with sony's playstation sizzling and xbox unveil later this week, which stocks this that space are the ones to own now? take on twitter, one man says the stock should be pummeled and why it's good for investors. stocks continuing their amazing run. dow topping 16000 for the first time, s&p above 1800. concerns over how far and how fast the markets have climbed the question is this, has the rally entered the danger zone are are those fears overblown? it's al